Contribution and Benefit Base Determination

Method for determining the base
The formula for determining the OASDI contribution and benefit base
is set by law. The formula is applicable only if a
cost-of-living increase becomes
effective for December of the year in which a determination of
the base would ordinarily be made. Because there is a cost-of-living increase for December 2014, the
formula is applicable. The formula states that the base for any year
Y after 1994 is equal to the 1994 base of $60,600 multiplied by
the ratio of the national average wage index for
year (Y-2) to that for 1992, with the result rounded to the nearest
multiple of $300. If the result is less than the current base, the base
is not reduced.

Base for 2015
Under the above formula, the base for 2015 shall be the 1994 base of $60,600
multiplied by the ratio of the national average wage index for 2013 to that for
1992, or, if larger, the 2014 base of $117,000. If the amount so determined
is not a multiple of $300, it is rounded to the nearest multiple of $300.

Calculation details

Amounts informula

1994 base

$60,600

1992 average wage index

22,935.42

2013 average wage index

44,888.16

Computation

$60,600 times 44,888.16 divided by
22,935.42 equals $118,603.56, which rounds to $118,500

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